#AceFinanceNews – MOSCOW – 21 March – Prime Minister Dmitry Medvedev on Friday demanded Ukraine pay back $11 billion that he said Kiev had saved through discounted gas prices in return for hosting a Russian naval base in Crimea.
Ukraine owes the money because Crimea is now part of Russia and the two countries’ 2010 lease agreement was now “subject to annulment,” Medvedev said at a meeting of the Security Council.
“The Ukrainian state saved some $11 billion dollars and accordingly the Russian budget has a missed profit of the same $11 billion,” he warned.
Soon after coming to power in 2010, then president of Ukraine, Viktor Yanukovych, agreed to extend the lease on Russia’s Black Sea Fleet in Crimea that was due to expire in 2017 for 25 years, until 2042.
In return, Moscow agreed to cut natural gas prices for Ukraine by $100 for every 1,000 cubic metres.
Russian Finance and Media Sources
#AceFinanceNews – Russia may revoke a deal with Ukraine, which gave Kiev a considerable discount on gas in exchange for hosting the Russian Black Sea Fleet.
The Russian PM said this would oblige Kiev to return $11 billion which Russia paid to lease the bases.
The PM’s statement comes at a time when the Ukraine economy is struggling for cash, with Russian officials insisting they were the first to be interested in Ukraine’s economic stability.
The country’s treasury is almost empty, as Ukraine’s government debt stood at about $66 billion in 2012, which is 37.42 percent of GDP.
The country owes about $2 billion to Russia’s Gazprom, with the company insisting that it did not want a gas crisis similar to 2009.
The company’s CEO Aleksey Miller said he does not want Ukraine’s economy to collapse, and was not asking for something extra, like advance payments.
Talking about Russia’s $3 billion loan tranche made in December, Deputy Russian Finance Minister Sergey Storchak said Russia won’t require early repayment of the debt, as it is interested in stabilizing the economic situation in Ukraine.
Under the terms of the Russia-Ukraine deal signed in December, Ukraine’s debt should not exceed 60 percent of GDP.
This means that technically Russia has the right to demand the money back before the bonds are due in 2015.
Russian Finance News Sources